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Forced Ranking Is As Bad For Yahoo As It Was For Microsoft

Let’s begin by stipulating a few things: YahooYahoo is a large, for-profit public company, not a progressive kindergarten. Its CEO, Marissa Mayer, inherited a workforce that was bigger than it needed to be and riddled with paycheck-cashing clock-punchers. Precisely because it’s so big, figuring out who the slackers are isn’t easy.

All that said, the so-called “stack ranking” system Mayer implemented for assessing employee performance is a bad idea, and she’d do well to do away with it.

Yahoo’s QPR (for quarterly performance review) regimen was already drawing withering reviews of its own from within the company’s ranks, according to Kara Swisher, even before MicrosoftMicrosoftannounced Tuesday that it would discontinue stack ranking. The system, which had been in place for many years, forced managers to grade employees on a curve, sorting a predetermined percentage of them into the worst-performing cohort, where they would be flagged for remedial measures or termination.

The timing of Microsoft’s about-face couldn’t have been more awkward for Mayer, inviting unflattering comparisons between the two companies (including this one from FORBES contributor Peter Cohan). Coming off as more rigidly corporate and dehumanized than Microsoft is a perverse accomplishment.

That critique focuses on appearance, not substance. But Mayer herself has made the supposed change in internal and external perception of Yahoo as an employer a central theme in her claim that she’s turning the company around.

If it’s really going to compete with FacebookFacebook, GoogleGoogle and Twitter, Yahoo needs to be able to go toe-to-toe with them in the furious Silicon Valley talent wars. Having spent so long at Google, Mayer knows how important perception is in winning those battles.

And she has made progress. Even what looked like a major setback — the wave of anger she unleashed when she rescinded Yahoo’s generous work-from-home policy — wasn’t really, at least not after she’d finished spinning it. Having employees interacting with each other on-site does foster innovation; otherwise, why would Google and Facebook be pouring so much money into campuses and housing designed to discourage them from ever going home?

Stack ranking is different. For starters, the evidence is decidedly mixed on whether it does what it’s supposed to do — help the cream rise to the top. What it certainly does do is make workers feel like they’re in competition with each other.

In some types of organizations, that may be fine. In Silicon Valley, it’s a problem. With Google and Facebook stockpiling engineers they might not even have jobs for just to keep them from going to work for the other, “too much talent” is a frequent lament. (See this Quora thread in response to the question “What’s the worst part about working at Google?”) In an environment like that, being seen as a top performer often depends on factors outside one’s control. (Indeed, Nicholas Carlson’s long profile of Mayer describes how many of her underlings at Google saw her management strictures as an impediment to doing their jobs.)

Employees at these companies already feel they’re competing against some of the world’s smartest people for limited opportunities and recognition. If you tell them they’re also competing for their jobs — explicitly, that is, not just in the way we all are every day — it starts to look like a crummy deal.

Stack ranking might look like an efficient way of eliminating mediocre players from the workforce. But for it to work as intended, Yahoo needs to be able to replace them with an infusion of potential stars. Anyone with real talent can choose between the home-run opportunity of a start-up and the security of a Facebook or a Google. So why would they want to work at a place that offers neither?

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“Stack ranking might look like an efficient way of eliminating mediocre players from the workforce. But for it to work as intended, Yahoo needs to be able to replace them with an infusion of potential stars”.

“The number of incoming resumes is up 5x”.

My conclusion is that those employees in the bottom 20% who don’t get their act together will be replaced. That would be a good thing

First off, getting 5x as many resumes doesn’t mean you’re getting the best resumes. That also could be a trailing indicator. It’s only in the last few weeks Yahoo’s stack-ranking has gotten much attention.

1st Idiot.. The one that decided that EVERY embedded image in ANY email opened using the Yahoo Mail Mobile APP would be displayed IMMEDIATELY upon opening the email. This employee must own stock in a porn company since this design means that no matter who you are, you are eventually going to see porn if you use the Yahoo Mobile APP since the SPAM filter WILL NOT catch all of it.

2nd Idiot. The one that designed the New Yahoo Web Mail interface without any way for the user to permanently change the font size in the read and compose windows. This is probably a violation of the ADA.

3rd Idiot. The one that designed the New Web Mail (Full featured and Basic) to never be better than 80% contrast. This is a direct violation of the ADA.

4th Idiot. The one that set the default cursor position in the compose window to the end of ALL existing text when trying to reply to a message using the Basic Version of the New Web Mail UI on a touch screen device.

5th Idiot. The one that buried the setting for the Basic Version 2 menus deep in a selection that is not intuitively apparent that the setting would be there.

6th Idiot. The one that has designed the system such that the Basic Version cannot be set by the USER as the default Version.

7th Idiot. Mayer since by all accounts she has final say on all new hires and all product roll-outs.

Marissa and her peers – despite all of their noise about the value of data – would be well served to take a course in statistical control. Dr. Deming pointed out many years ago, “Ranking comes from a failure to understand variation.”

Wouldn’t it be fun to watch Marissa, Sergey, Larry, Zuck, Ev, Jack and Biz run the red bead experiment?

change doesn’t come from a slogan or a speech. it comes from putting the right people in the right places to get the job done. obviously these people have never read “straight from the gut” by jack welch. differentiation isn’t about firing the lowest 10%. its about communicating to everyone in the company how they are doing performance wise and company values wise so that everyone knows how to improve and be successful in the company. and when the times comes those “c” players have had time to face reality and take a new path.

I worked at a company that implemented stack ranking, and I don’t think it helped weed out the weak employees at all. In a department of only 5 people, my manager had to choose the bottom ranking. We had all performed very well. Instead of choosing the employee(s) that were subpar, she chose the new employee, giving the lesser performing employee a more positive review. It was an anti-team environment, because someone will always come out a loser, no matter how hard the team worked.